Gallon Environment Letter – the daily edition – a policy letter from the Canadian Institute for Business and the Environment

Airline spat may presage Canada – EU conflict over carbon

At it annual meeting this weekend, the International Air Transport Association launched a blistering attack on the European Union’s plan to require all airlines which land in Europe to surrender greenhouse gas offsets (“carbon credits”) to cover the emissions from their flights. The EU directive was adopted in 2008 and initially welcomed by the European airline industry but now international airlines have taken a strong position against the plan, calling it an illegal barrier to trade and extraterritorial application of European law.

In his speech to the IATA annual meeting, Giovanni Bisignani, Director General and Chief Executive Officer of IATA, demanded that Europe abandon its plans to include international aviation in its Emissions Trading Scheme (ETS) from 2012. He said “Uncoordinated and punitive regional measures distort markets and undermine global efforts to reduce emissions. The EU ETS is a $1.5 billion cash grab that will do nothing to reduce emissions. BASTA! (Enough!) to Europe’s short-sighted actions. It’s time to be serious about climate change and honest in developing global solutions.” IATA believes that it is already a global leader in reducing carbon emissions, having led industry consensus to address climate change by improving fuel efficiency an average of 1.5% annually to 2020, capping net emissions from 2020 with carbon-neutral growth, and halving net emissions by 2050 compared to 2005.

So far EU Climate Commissioner Connie Hedegaard has indicated that the EU has no intention of backing down on the plan to require airlines to submit allowances to cover the carbon emissions of their flights into and around Europe, though there are media reports that she has offered to exempt Chinese airlines from the program as long as they take “equivalent measures” to reduce and offset their carbon emissions. Various airlines are fighting the EU initiative in the courts and through EU lobbying. Air Canada and Air Transat, the two Canadian carriers with regular flights to Europe, have not yet had much to say to the public on this issue.

With the airline battle becoming even more intense, it is difficult to see how European negotiators would allow a Canada – EU Free Trade Agreement to move forward without some mention of how the carbon emissions playing field will be leveled between European industry that must comply with the EU Emissions Trading Scheme and Canadian exporters to Europe who are faced with no similar regulations. Europe has already been studying the matter of increased carbon emissions from the Canadian oil sands even though very little oil is exported from Canada to the EU.